A Defense of Proposition 13 Property Tax Revenues
by Richard Rider, Chairman, San Diego Tax Fighters
Updated 1 August, 2015
When it comes to gathering sufficient property taxes, Prop 13 is no problem at all – except for profligate spenders. Look at the history of my San Diego County – a history which pretty much reflects the history of property taxes in the urban/suburban counties that hold over 85% of California’s population.
According to San Diego County, in 1977 – the year BEFORE Prop 13 took effect (when everything was working great, according to Prop 13 critics) – our countywide property tax revenue was about $639 million. In the 2014-2015 fiscal year, our county reports property tax revenues of $5.368 BILLION. Hence for every property tax dollar collected in 1977, the county in 2014-15 collected $8.41. And BTW, according to the County Assessor, since Prop 13 passed, 97% of the pre-Prop 13 county owner-occupied homes have changed hands (and been reassessed) at least once.
During that time frame, our county population has grown about 92.6%, and inflation has gone up about 266%. Hence property tax revenues today are higher than the bloated PRE-Prop 13 year, even after adjusting for inflation and population growth.
California in 2014 ranked 17th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But CA property taxes per owner-occupied home were the 10th highest in the nation in 2009.
http://www.taxfoundation.org/taxdata/show/1913.html (2009 latest year available on homes)
To see how CA ranks numerically against the other states on tax, regulation, litigation, utility costs and other economic factors (with confirming URL’s), go to: www.TinyURL.com/CA-vs-other-states and read the latest updated version of my dreary fact sheet “Breaking Bad – CA vs. the Other States.”
ANOTHER PROP 13 BENEFIT: It turns out that, under Prop 13, property tax revenue is FAR more stable than our other forms of CA tax revenue. During the recession, income tax revenue plunged, and sales tax revenue significantly declined.
But property tax revenue seldom goes down AT ALL. Since the year Prop 13 passed in 1978, San Diego County real estate property tax revenue has ALWAYS gone up every year but two – in the 2008-09 crash the property tax revenue dropped a minuscule 0.8%, and in 2010-11 it dropped 0.6%. In 2014-15, county property tax revenues are up a robust 8.8%.
Not one person in a thousand knows about this revenue stability. The press has not covered these amazing facts.
Revenue is up because Prop 13 has the little-known added benefit of smoothing out real estate property tax revenue from year to year. Many properties this past year (generally those purchased prior to 2003) had their property tax go up 2%. Add to that the property resales, property improvements, “catch up” reassessments and new structures (all of which establish new tax assessment levels), and the revenue stayed rather constant in the teeth of our economic downturn.
Consider what happens without Prop 13 protection: In the real estate boom years from 1998 through 2005, property taxes would have SOARED. Even WITH the Prop 13 limitations, San Diego County property tax revenue collection during this period STILL rose 111%. But then in the next four years, dropping property values would have caused a dramatic plummet in property tax revenues – revenues that governments would now be hooked on – just like we see with our volatile sales taxes, and especially with our hugely erratic income tax revenues. Property tax revenues are CA governments’ one steady, reliable source of income – thanks to Prop 13.
NOTE: Statistics provided above – plus a year-by-year summary since 1975 – are on my verifiable spreadsheet posted at –
Additional Thoughts about Prop 13
by Richard Rider
For 30+ years since the passage of Prop 13, advocates for higher taxes have complained about inadequate CA property tax revenue. But the one thing ALL such critics have in common is that they NEVER show the actual revenue shortfall. They never provide the figures.
They never compare the property tax revenue collected in 1977 (the year before the big Prop 13 drop when everything was supposedly hunky dory) with the property tax revenue being collected today.
Why? For one of two reasons. And ONLY one.
1. They don’t know the figures. Never checked. Even supposed financial gurus haven’t a clue what the numbers are. They just INTUITIVELY know that the revenues are woefully inadequate. After all, this “massive revenue shortfall” has been endlessly cited by fellow leading California progressives for decades, so most liberals mindlessly conclude that it MUST be true.
2. They DO know the figures. But they intentionally omit them, as such figures DESTROY their argument. For it turns out – compared to property tax revenue collected the year BEFORE Prop 13 passed – such tax revenues have grown faster than inflation and population COMBINED.
Much of the complaining about Prop 13 has to do with its lack of “fairness.” Property is taxed by a formula that caps the yearly tax increases, resulting over time in long-time property holders paying less property tax than newer purchasers of similarly valued property. But is “fairness” the issue? I think not.
We could have this discussion if the idea were to somehow “equalize” the property taxes in a revenue neutral fashion (though I still disagree with the change). But the proponents’ goal is to make the senior property owners and commercial properties pay MORE property taxes – with little or no relief for the newer residential property purchasers. Obviously this “fairness” objection is just a ruse to further raise property taxes – and, as I’ve demonstrated above, Californians pay quite enough property taxes, thank you very much.
Are commercial properties not paying their “fair share”? You decide. In 1979-80, businesses paid 58.2% of all CA property taxes. In 2011-12, they paid 60.3%. Commercial properties pay a HIGHER percentage of the property tax than they did 35 years ago!
As to commercial property which “turns over” less often than residential property, a discussion of raising property taxes faster needs to include consideration of our plethora of business “fees” and our already high state corporate income tax – highest west of the Mississippi (except for Alaska) – our economic competitors. Our state’s businesses are viewed as ATM machines by our greedy California state and local governments. Raising commercial property taxes faster would only accelerate the business migration out of the state – while further deterring any business from considering relocating IN to California.
Still think our California property taxes are too low? Consider this: The average impact fee in CA for single-family residence in 2012 was $31,100 per unit, nearly 90 percent higher than the next most expensive state and 265 percent higher
[more than TRIPLE!] the norm among jurisdictions that levy such fees, which typically pay for capital improvements, like water and wastewater facilities, required by a new development. Many states and localities on the eastern side of the Sierras have no such fees at all. To add insult to injury, that “fee” becomes part of the price of the home or apartment – the base on which your annual property taxes are calculated.
These fees also impact multifamily housing; the state’s fees on multifamily units averaged $18,800 – 290 percent [almost quadruple!] above the average outside California – again, not counting the states and cities where such fees are not levied at all.
Priority Candidate Recommendations
SDTF encourages readers to consider donating and volunteering for these two critical races.
California State Propositions
- Prop 1 – No
- Prop 2 – Yes (weak endorsement)
- Prop 45 – NO!!
- Prop 46 – NO!
- Prop 47 – Yes
- Prop 48 – No (gambling should not be a Native American monopoly throughout California)
Summary of County props:
Recommend NO on all tax increases and bonds. YES on Escondido’s Prop H (property rights issue — conversion of defunct country club into housing).
Supported Candidates in County
- 53rd Congressional – Larry Wilske
- 75th State Assembly – Marie Waldron
- La Mesa City Council – Bill Baber
- La Mesa City Council – Guy McWhirter
- Carlsbad Mayor – Matt Hall
- Oceanside City Council – Gary Felien
- Oceanside City Council – Jerry Kern
- Carlsbad School Board – Sage Naumann
- Poway School Board – Jeannie Foulkrod
- San Diego Community College Board – Donna Woodrum
June, 2014 California State and San Diego Region Recommendations
NOTE: San Diego Tax Fighters is primarily interested in fiscal issues. Thus we have a natural tendency to pick Republicans over Democrats – especially since no third party candidates will be on the November ballot (thanks to the “top two” bogus reform).
Some candidates we endorse by name – indicating we have enough confidence that they will be fairly good (to VERY good) on tax and spend issues. Some races we make no endorsement for one or more of these three reasons:
- The candidate’s commitment to fiscal frugality has not been demonstrated to our satisfaction.
- We don’t know the people in the race.
- We think there is more than one good candidate choice for the race.
It should be noted that we do occasionally add OR SUBTRACT a recommendation prior to the election – this list is subject to change. Bear that in mind.
IMPORTANT: We have two general levels of support for a candidate:
1. ACTIVELY SUPPORT – This rare category encourages SD TF supporters to both contribute and volunteer for this candidate. These are KEY candidates in COMPETITIVE races where your financial and volunteer assistance can help affect the outcome of the race. Occasionally this might be a candidate who is not a top-flight fiscal bulldog, but the competitive race is critical to the passage or blocking of legislation. A designated candidate will have ACTIVELY SUPPORT after their name.
2. PASSIVELY SUPPORT – This is the “normal” level of support – vote for them, but don’t feel compelled to donate or volunteer for the candidate based on our recommendation alone. Since almost all candidates fall into this second category, we don’t need to list this level of support beside each candidate’s name.
In many races, the ultimate winner is already known, thanks to the state’s demographics or (locally) gerrymandered districts. So while voting is a right/privilege/obligation/whatever, the outcome is too often preordained. But there are enough competitive races to merit voting. Propositions are particularly important, as they are issue specific.
CALIFORNIA STATEWIDE OFFICES
Governor – Tim Donnelly
Lt. Governor – Ron Nehring
Controller – Ashley Swearengin
Treasurer – Greg Conlon
Attorney General – David King
Insurance Commissioner – Ted Gaines
Board of Equalization – 4th District – none (several good choices)
Prop 41 – Veterans Housing and Homeless Bonds – NO
NOTE: Most people and groups support this measure. Even taxpayer groups. But most supporters (even taxpayer groups) think that it’s like the previous veterans bonds in that it’s self-funding (the previous veteran MORTGAGE bonds were paid for by the vets).
But this measure is a labor union and nonprofit boondoggle that will spend a lot of money for doubtful value and zero taxpayer reimbursement. Redundant veterans’ programs will have fat budgets and zero performance requirements. The building of veterans’ housing will be incredibly overpriced “affordable” housing – built with “prevailing wage” labor union requirements. The cost per assisted vet will be absurdly high.
Moreover, we don’t think it’s the job of the STATE governments to take care of military veterans – there are numerous federal programs, plus many nonprofits and charities helping vets.
Finally, the $50 million annual bond payment is a NEW expenditure and ongoing obligation. To gain SD Tax Fighters’ support, we’d like to see a CUT in some other program spending (or public employee compensation) to make the prop revenue neutral.
Prop 41 is a “feel good” measure that will pass with overwhelming majorities, but sadly few understand this very different veterans’ bond measure than the self-funded mortgage bonds of years past – it’s a sop to the labor unions at taxpayer expense.
Prop 42 – Public Records – YES
In essence, it further mandates local governments deliver the goods when public record requests are received. The cost is minimal compared to the valued disclosure (and ongoing THREAT of disclosure) that such transparency provides.
SAN DIEGO REGION
SAN DIEGO CITY
PROP A – Election “housekeeping” changes of little import and less cost – but necessary.
PROPS B & C – Attempts to dramatically cut back industrial activity around NAASCO shipyard for little residential benefit. Definite NO votes on both.
SAN DIEGO COUNTY, REGIONAL AND LOCAL OFFICES
52nd District – Carl DeMaio – ACTIVELY SUPPORT
53RD District — Larry A. Wilske
CA STATE SENATE
38th State Senate District – Joel Anderson
CA STATE ASSEMBLY
71st Brian Jones
75th Marie Waldron
78th Barbara Decker
San Diego County Assessor – Ernie Dronenburg
San Diego county Treasurer – Dan McCallister
SAN DIEGO CITY
District 6 – Chris Cate – ACTIVELY SUPPORT
District 2 – Lorie Zapf – ACTIVELY SUPPORT
SAN DIEGO SCHOOL BOARDS, ETC.
San Diego Community College, District A – Donna J. Woodrum
San Diego Unified School District B – Amy Christine Redding
Progressives have many, MANY wrongheaded ideas about the economy, incentives — and generally “what works” and HOW it works. But there’s one area that particularly galls me — perhaps the most evil Democrat policy of all — their fanatical opposition to school choice.
There is NO rational reason to oppose giving parents such choice. The results have been proven to usually be superior for students — and never worse. The article below discusses some of these studies, and is worth reviewing.
But the Democrats’ allegiance (at least the Democrat LEADERSHIP’S primary concern) is the health and wellbeing of education unions and their members. If that means minority urban kids are limited to a substandard education in dangerous schools — so be it. The KKK fully agrees!
BTW, many Democrat blue collar and poor parents DO want school choice. But their party does not. And for too many such hapless folks, by continuing to vote Democrat, they are demonstrating that their party loyalty is more important than their kids’ future. Or perhaps they just don’t connect the dots.
In general, studies comparing public vs. private/charter schools reach one of two conclusions (depending on how ideologically liberal the researchers are).
1. School choice improves the lot of kids who take advantage of it.
2. School choice works no better than government monopoly schools.
But here’s the thing — NO reputable study (even biased studies) concludes that school choice — especially private schools — provides an INFERIOR education. This is a KEY point.
Here’s why: Education vouchers and/or tax credits provide as good or better an education than government schools –at a significantly lower cost. Every kid that chooses to take advantage of vouchers/tax credits reduces the cost of “public schools.” Hence there is no rational reason to continue this government monopoly — at the very least, we should offer students and their parents lower cost school choices.
Perhaps the most dramatic example of this cost disparity is our nation’s capital. It has a pathetic little voucher option for a few hundred students — picked by lottery from a FAR larger pool of hopeful qualified applicants.
The D.C. education vouchers are for $7,500, though only about $6,700 is actually expended per student on their private schools. Contrast that with the $23,000 per student D.C. district outlay for government centers of learning.
Prop Subject Recommendations 19 Marijuana YES 20 Elections YES 21 Taxes NO 22 State spending NO 23 Environment YES 24 Taxes NO 25 State spending NO 26 Taxes YES 27 Elections NO Prop Recommended Description A YES Ban on County Project Labor [Union] Agreements B No Position San Diego City Attorney Office hiring practices C No Position Development of Pacific Highlands Ranch D NO San Diego City Sales Tax increase G YES Carlsbad — Require citizen vote to raise pensions H NO Chula Vista — Raise phone taxes J NO SD Unified School District — Impose parcel tax K NO San Marclos School District Bond L NO Julian High School Bond M NO Dehesa School District Bond O NO South Bay Union School Parcel Tax P NO Encinitas Union School Bond